Circuit City Crumbles

Just over a year ago, Circuit City made big news of the wrong kind by laying off 3,400 or so workers for being too good at their jobs. That’s right, they laid off the best employees who were making more money than their coworkers because they received excellent reviews, beat their sales goals, and were compensated by Circuit City management for their outstanding performance. Here’s a good financial analysis article that includes a graph at the end showing Circuit City’s consistent degradation under current management.

Here’s an article on CNET.com doing a good job pointing out how well Circuit City has done the past year against Best Buy: they are failing miserably. Stores are empty compared to Best Buy stores, revenue is up but they didn’t make a profit, and their stock price is down to McDonald Happy Meal pricing.

For the more personal side of these types of layoff decisions, read this article.

I’m not a financial genius, but seeing a management team firing their most productive sales people to keep their cheaper and less productive employees doesn’t seem to be a Warren Buffet type move. Maybe good companies understand that firing bad workers helps the company more than firing good workers. Maybe Circuit City management missed that lesson. Maybe Circuit City’s headstone will read, “RIP: Management Stupidity Kills Circuit City.”